In this article, we discuss the 10 best value stocks to buy now.
It has been a wild ride for investors on Wall Street for more than a year. Stocks have experienced extreme polarization since the market fell in the first quarter of 2020 due to the coronavirus. The S&P 500 made a record high in less than a year before declining substantially. Fears of a recession, inflation, destabilization of Europe’s political situation, and other macroeconomic factors have heavily contributed to the market decline.
With the Federal Reserve raising interest rates and the economy potentially slowing, stocks could have more downside. Nevertheless, there is also opportunity if investors invest wisely over the long term given the low valuations.
In a more volatile environment, some investors are turning towards value stocks.
A value stock is generally a stock that’s trading below perceived fundamentals. Many value stocks have a higher than average dividend yield or a low forward P/E ratio. Many value stocks have also fallen out of favor for various reasons.
Although many value stocks stay cheap or decline even further, there could also be opportunities if an investor picks the right stocks.
Todd Rosenbluth, a senior director of ETF and mutual fund research at CFRA said in an interview, “it’s a major shift toward value and away from growth that coincides with the prospect of higher interest rates becoming a reality.” He further added, “People frequently assume that particular industries, including finance, energy, and consumer goods, are more value-oriented.”
jcomp/freepik
Our Methodology:
In order to identify the best value stocks to buy right now, we are going to use the collective wisdom of nearly 900 hedge funds tracked by Insider Monkey. We started with Vanguard Value Index Fund ETF’s nearly 344 holdings and then sorted these stocks by the number of hedge funds with long positions in each stock. Whenever two stocks have the same number of hedge funds, we used the dollar value of total hedge fund holdings as the tie-breaker. So, according to hedge funds, here are the 10 best value stocks to buy right now:
Best Value Stocks to Buy Now
10. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 58
Verizon Communications Inc. (NYSE:VZ), an American telecommunications business, provides data and video service solutions to its clients.
The company is regarded as a value stock by many given its strong dividend. In terms of its dividend, Verizon Communications Inc. (NYSE:VZ) recently increased its dividend by 1.25 cents per share to 64 cents per share. The dividend increase amounted to the 16th annual dividend increase.
Although shares are at multi-year lows, Verizon Communications Inc. (NYSE:VZ) could offer a value opportunity if the economy doesn’t go into a recession and the company successfully grows earnings.
Many hedge funds like the stock. At the end of the second quarter of 2022, 58 hedge funds in the database of Insider Monkey held stakes worth $2.29 billion in Verizon Communications Inc. (NYSE:VZ). When looking at the institutional investors followed by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the biggest position in Verizon Communications Inc. (NYSE:VZ). Fisher Asset Management has $879.83 million position in the stock, comprising 0.62% of its 13F portfolio.
Like Bank of America Corporation (NYSE:BAC), JPMorgan Chase & Co. (NYSE:JPM), and Berkshire Hathaway Inc. (NYSE:BRK-B), Verizon Communications Inc. (NYSE:VZ) is a widely held blue chip stock among hedge funds.
9. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 65
Intel Corporation (NASDAQ:INTC) is an American global tech company and one of the largest providers of microprocessors. Although Intel Corporation (NASDAQ:INTC) is no longer the leader in the sector, semiconductors are vital to modern economies and the market opportunity for semiconductors is expected to grow to $1 trillion by 2030 according to CEO Pat Gelsinger.
Intel Corporation (NASDAQ:INTC) is also spending a lot of money on research and development to regain leadership status and the company is co-investing with various firms to expand its semiconductor manufacturing facilities. It recently announced a $30 billion co-investment with Brookfield Asset Management (BAM).
Although shares could continue to fall if Intel Corporation (NASDAQ:INTC) fails to catch up with its competitors, there is also a value opportunity if Intel Corporation (NASDAQ:INTC) sustainably grows earnings again.
As of the end of Q2 2022, 65 of the hedge funds tracked by Insider Monkey owned stakes in Intel Corporation (NASDAQ:INTC). Those stakes held a collective value of over $2.5 billion.
8. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 71
Headquartered in Ohio, the Procter & Gamble Company (NYSE:PG), is a multinational company that sells branded consumer products. According to analysts Procter & Gamble Company (NYSE:PG) is less vulnerable to cyclical variations because of its focus on personal care and hygiene. As a result of its less economically sensitive businesses and its history of earnings growth, many investors view The Procter & Gamble Company (NYSE:PG) as a value stock.
Among the hedge funds tracked by Insider Monkey, 71 funds were bullish on The Procter & Gamble Company (NYSE:PG) at the end of Q2 2022.
As of September 2, Bridgewater Associates owned 6.74 million shares in The Procter & Gamble Company (NYSE:PG). The hedge fund’s total stake in the company stood at over $970 million, which accounted for 4.11% of its 13F portfolio.
7. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 72
Exxon Mobil Corporation (NYSE:XOM) is an American oil and gas company with a strong dividend history. Given its business strength, Exxon Mobil Corporation (NYSE:XOM) has increased its dividend for 38 consecutive years.
Given the higher gas prices, Exxon Mobil Corporation (NYSE:XOM) has also strong profits. In the second quarter, Exxon Mobil Corporation (NYSE:XOM) delivered EPS of $4.14 and revenue of $116 billion, beating estimates by $0.29 and $3.6 billion respectively.
If oil prices remain high, Exxon Mobil Corporation (NYSE:XOM) could be a value stock given its earnings potential and forward P/E ratio of 8.89. If oil prices decline, however, Exxon Mobil Corporation (NYSE:XOM) will need to successfully transition to renewable energy to remain a value stock.
As of the end of Q2 2022, 72 of the hedge funds tracked by Insider Monkey owned stakes in Exxon Mobil Corporation (NYSE:XOM). Those stakes held a collective value of over $7.4 billion.
6. Comcast Corporation (NASDAQ:CMCSA)
Number of Hedge Fund Holders: 75
The American telecom provider Comcast Corporation (NASDAQ:CMCSA) offers home phone and internet services.
Although shares are down almost 29% year to date, Comcast Corporation (NASDAQ:CMCSA) could be regarded as a value stock given its forward P/E ratio of 9.27.
For its second quarter, Comcast Corporation (NASDAQ:CMCSA) also had a strong quarter with EPS of $1.01, beating estimates by $0.09. Revenue was $30.02 billion, beating estimates by $346.88 million.
According to Bloomberg, Comcast Corporation (NASDAQ:CMCSA)’s NBCUniversal unit is also looking to cut as much as $1 billion from the TV network budget.
As of the end of Q2 2022, 75 of the hedge funds tracked by Insider Monkey owned stakes in Comcast Corporation (NASDAQ:CMCSA. Those stakes held a collective value of over $5.39 billion.
In terms of individual funds, Jean-Marie Eveillard’s First Eagle Investment Management is the largest shareholder in Comcast Corporation (NASDAQ:CMCSA) in our database and holds a stake worth $1.18 billion. The investment covers 3.35% of First Eagle Investment Management’s 13F portfolio.
Alongside Comcast Corporation (NASDAQ:CMCSA), Bank of America Corporation (NYSE:BAC), JPMorgan Chase & Co. (NYSE:JPM), and Berkshire Hathaway Inc. (NYSE:BRK-B) are also widely held blue chip stocks among hedge funds.
5. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 83
Johnson & Johnson (NYSE:JNJ), a market-leading healthcare conglomerate, is considered a value stock by many investors given its forward P/E ratio of 15.37. Although rising interest rates could lower earnings valuations, Johnson & Johnson (NYSE:JNJ) has pricing power that could increase earnings.
For its fiscal 2022 second quarter results, the company surpassed the Wall Street consensus by $195.47 million and earned revenue of $24.02 billion, an increase of 3.04% year over year. The company’s $2.59 earnings per share beat the forecasts by $0.04.
At the end of the second quarter of 2022, 83 hedge funds were bullish on Johnson & Johnson (NYSE:JNJ) and held stakes worth $6.76 billion.
Here is what asset management firm, Mayar Capital, had to say about Johnson & Johson (NYSE:JNJ) in its second-quarter 2022 investor letter:
J&J is currently our largest position and a long-standing holding. The majority of the group’s sales comes from its collection of pharmaceutical franchises, but a large majority (~45%) comes from its collection of medical device businesses and its consumer brands.
Here’s how JNJ make and spend a dollar of revenues: As of 2021, about 55 cents of that dollar comes from its pharmaceutical sales – sales of drugs to pharmacies and distributors – while 30 cents come from the sale of medical devices, such as surgery equipment and orthopaedics. The rest of that dollar in sales comes from sales of JNJ’s consumer brands such as Listerine mouthwash, Nicorette nicotine tablets and Neutrogena cosmetics.
To make that dollar, however, JNJ typically spends about 25 cents to make the products themselves and another 27 cents on marketing and general administrative functions. This leaves JNJ with about 48 cents on the dollar in profit…(Click here to see the full text).
4. UnitedHealth Group Incorporated (NYSE:UNH)
Number of Hedge Fund Holders: 91
UnitedHealth Group Incorporated (NYSE:UNH) is an American multinational healthcare and insurance company. Although its stock has increased less than 3% year to date, UnitedHealth Group Incorporated (NYSE:UNH) has outperformed the Dow Jones index, which is down more than 13%.
Given the company’s business prospects, many analysts are bullish. Ann Hynes, a Mizuho analyst, maintained a Buy rating on the stock in August and increased the firm’s price target for UnitedHealth Group Incorporated (NYSE:UNH) from $550 to $600 following the company’s ‘strong’ Q2 results.
At the end of Q2 2022, 91 hedge funds held positions in UnitedHealth Group Inc. (NYSE:UNH). The total stakes of these hedge funds amounted to $10.90 billion.
3. Bank of America Corporation (NYSE:BAC)
Number of Hedge Fund Holders: 99
Based in North Carolina, Bank of America Corporation (NYSE:BAC) is a multinational investment bank that offers financial services. Although big banks are sensitive to economic trends such as potential recessions which could send the stock lower in the next few years, Bank of America Corporation (NYSE:BAC) is still considered a value stock in the long term given the company’s market share in banking and its price to book ratio of 1.13.
Many hedge funds like the stock. According to Insider Monkey’s Q2 data, 99 hedge funds had stakes in Bank of America Corporation (NYSE:BAC). Warren Buffett’s Berkshire Hathaway had the largest numbers of shares in Bank of America Corporation (NYSE:BAC) worth $31.44 billion.
2. JPMorgan Chase & Co. (NYSE:JPM)
Number of Hedge Fund Holders: 104
JPMorgan Chase & Co. (NYSE:JPM) is an American global investment bank and financial services holding company.
Although its earnings and stock could decrease if a recession occurs, JPMorgan Chase & Co. (NYSE:JPM)’s long term earnings potential nevertheless makes it a value stock. In July, Peter Richardson of Berenberg wrote that JPMorgan Chase & Co. (NYSE:JPM) shares traded at a 20% discount to their long term average. In July, shares of JPMorgan Chase & Co. (NYSE:JPM) traded for around what they’re trading now.
Given JPMorgan Chase & Co. (NYSE:JPM)’s strong businesses, many hedge funds like the stock. According to Insider Monkey’s Q2 data, 104 hedge funds had stakes in JPMorgan Chase & Co. (NYSE:JPM). The total value of the holdings is $5.80 billion.
Fisher Asset Management is the largest shareholder in JPMorgan Chase & Co. (NYSE:JPM) with shares worth $899.69 million.
1. Berkshire Hathaway Inc. (NYSE:BRK-B)
Number of Hedge Fund Holders: 109
Berkshire Hathaway Inc. (NYSE:BRK-B) is a conglomerate holding company that operates in the industries of insurance, freight rail transportation, and utilities.
Given the company’s CEO, Warren Buffett, is known as the ultimate value investor, many investors also regard Berkshire Hathaway Inc. (NYSE:BRK-B) as a value stock.
Berkshire Hathaway Inc. (NYSE:BRK-B) has many businesses that have pricing power if inflation rises and the company also has many businesses that have strong growth prospects over the next ten years. According to Insider Monkey’s Q2 data, 109 hedge funds had stakes in Berkshire Hathaway Inc. (NYSE:BRK-B). The total value of the holdings is $17.30 billion.
You can also take a look at Simon Sadler’s Segantii Capital is Bullish on These 10 Stocks and 10 Best Stocks to Buy Now According to Billionaire Andreas Halvorsen.
Follow Insider Monkey on Twitter
Suggested Articles:
- 10 Stocks Stanley Druckenmiller is Selling
- 10 Best Small-Cap Stocks to Buy According to Hedge Funds
- 10 Best SPACs to Invest In According to Reddit
Disclosure. None. 10 Best Value Stocks to Buy Now is originally published on Insider Monkey.
